Kmart Asks Contempt Order for Former Exec

Published 7:00 pm, Monday, February 10, 2003

Associated Press Writer

Kmart Corp. has asked a federal bankruptcy court judge to find a former executive in contempt for failing to respond to several subpoenas.

Kmart says seven subpoenas have been issued for Anthony D'Onofrio, former executive vice president and chief supply chain officer, directing him to supply documents and appear for depositions in Kmart's investigation into its pre-bankruptcy management.

The retailer says D'Onofrio has refused to heed the orders. Kmart said it has given some of them to D'Onofrio at his Texas home, his New Jersey office and at the airport in Newark, N.J.

In a court filing Monday, Kmart identified D'Onofrio as a "critical player in the crisis at Kmart during 2001" and says "questions remain as to whether D'Onofrio, and those working with him, engaged in serious breaches of their fiduciary duties."

A message left at D'Onofrio's office Tuesday was not immediately returned.

Kmart has said it might have legal claims against some of its former leaders for being "grossly derelict" in their duties.

Anonymous letters, claiming to be from employees, prompted Kmart to launch a review of its accounting practices last year. The company says D'Onofrio is the subject of 16 of those letters.

D'Onofrio also received a $2.5 million retention loan, one of the largest of $28.8 million in loans given to a number of top executives and now under scrutiny, according to the filing.

Kmart asked Judge Susan Pierson Sonderby to order D'Onofrio to testify and produce the requested documents. Kmart also asked that he be fined for his refusal to comply with the subpoenas and that the amount cover Kmart's expenses for trying to serve them.

Last month, Kmart said it had conducted more than 570 interviews of current and former employees and reviewed more than 1.5 million pages, including accounting records, audits, and e-mails, as part of its investigation.

Troy, Mich.-based Kmart, which plans to exit bankruptcy by April 30, filed for bankruptcy on Jan. 22, 2002.